To Bid or Not to Bid

Seeking government work has its own unique set of challenges.

About $131 billion, or 17% of the total cost of the Stimulus Bill, is targeted to construction of all kinds.

The Stimulus Bill should put many contractors across the U.S. to work as projects are approved.

Prevailing wages

The Davis-Bacon Act was enacted in 1931 to “protect communities and workers from the economic disruption caused by competition arising from nonlocal contractors coming into an area and obtaining federal construction contracts by underbidding local wage levels.”

“Prevailing wages are huge,” says Hernandez. “Be sure of what wage rate scale you're using and if it's fixed for the duration of the project or if it's updated annually. Sometimes for multiple year jobs you'll get a 2009 table and a 2010 table and so on. On another job it's locked for the duration of the job. There will be certified payroll associated with proving that you are paying that rate and they will audit you.”

Prevailing wage requirements always increase wages, more for some jobs than others. “They tell you that it's prevailing wages and in most cases the wages are in the specifications,” says Dan Dorfmueller, estimator and project manager with Patterned Concrete in Cincinnati. “Wages are lower in Kentucky than in Ohio. We figure out how much we paid everyone and we are very honest about it. Wages are about 40% higher in some cases. For the higher-priced guys, it's only a dollar or two more, but for the lower paid guys it's another $8, $10, or even $12 an hour.”

Disadvantaged businesses

Having some percentage of the job contracted with a “disadvantaged business enterprise” or DBE, is another common requirement. This is a company at least 51% owned by a woman or a minority. On federal highway projects, 10% of the total contract must go to DBEs.

Sustainability aspects

The stimulus package emphasizes green projects and those that reduce national dependence on fossil fuels. The GSA has $4.5 billion to make federal buildings more energy-efficient. While that may be a factor in how projects get funded, there is little evidence that green concerns are used in contract awards.

Who gets the work

Public infrastructure work is out there but you must deal with all of the extra government requirements, and with the fierce competition, you may have to take less money at the same time.

“The guy who got a county job recently was 40% cheaper than us,” says Dorfmueller. If you look at average production rates, he would have to do about 2000 square feet per day and there's no way he can do that. It means he doesn't really understand the job and how it has to be built and staged.”

The winning bids on the Stimulus Bill's transportation projects are 15% to 30% lower than expected, says the the American Association of State Highway and Transportation Officials.

The Wall Street Journal's Wayne Baimbridge notes, “To add insult to injury, not only do public agencies tell you how much you have to pay someone (prevailing wage), they limit how much they are willing to pay the company or contractor. Basically, we break even on public works projects if the rules are followed.”

Go after the work. But do so with your eyes open and an understanding that it will involve more hassle and less pay. Still, that may be better than just shutting your doors.

This story is by William D. Palmer of Complete Construction Consultants, e-mailwpalmer@cee3.com; TCP editor in chief Rick Yelton; and Tim Gregorski, editor in chief of CONCRETE CONSTRUCTION.